Without a shred of empathy or appreciation for what it means Budget 2020 says—
- “[Child Poverty] Rates on measures of low income with a fixed threshold are expected to increase”. And
- “On measures of material hardship, rates are expected to rise sharply, as previous New Zealand experience suggests that these rates are particularly sensitive to economic changes.
Does child poverty now not matter? Why, since the problem was so clearly identified was it then ignored? And of course, these children live in families with adults who are also impoverished- so does that not matter either?
Adults of working age, especially in tourism and hospitality, but widespread across the economy, will bear the brunt of the economic fall-out. Children in low-income or benefit dependent families will be pushed even further into poverty that will stunt their life chances and damage the recovery and social cohesion for decades to come.
Yes, the budget had to protect jobs and employment as a priority, but many firms will not survive the enhanced wage subsidy period and nor should they if they are not well suited to the post covid world. We won’t need nearly as many cafes and restaurants without the same numbers of tourists for example. With unemployment forecast to rise to around 10% it is inevitable that tens of thousands more will need to access the run-down welfare system. While optimistic projections see unemployment quickly reversing in a V-shaped recovery, it is hard to share that optimism.
Benefit levels are far below the poverty line so that means-tested supplementary hardship payments will soar, but the newly unemployed will have to be really poor to qualify. All the special needs grants, the accommodation supplement and recoverable assistance are means-tested and further lock families into the poverty trap. These expenditures are projected to grow 40% to $3.72 billion by 2024. Low income families in and out of benefits and casual work in the protracted recession will see their balance sheets rapidly eroded and many may never recover.
I see no evidence in this budget that the costs of COVID-19 will be shared fairly. Throwing a few million at foodbanks is a band aid that dangerously normalises private charity as the answer. The demands on budgeting services are already at breaking point. It will be a shocking winter.
Older people have had no reduction in their NZ super payments and will get the doubled winter energy payments whether they need it or not. They have been protected health wise in this pandemic and while their investment income may drop, many will find themselves better off from two months of reduced spending.
It is doubly tiresome that $10 billion will be allocated to the New Zealand Super fund over the next four years when Government couldn’t find even the $0.5 Billion necessary to fix the discrimination against poor children in Working for Families. Why borrow more to put money into a treasure chest today for a far-off time when that money is needed so desperately today?
The pre-budget announcement removed the need to satisfy the hours test for the In Work Tax Credit (IWTC) BUT it is only for “working” families who are not receiving a main benefit and have some level of employment income each week or the wage subsidy. Thus, there will now be the ‘deserving’ and ‘undeserving’ unemployed: some whose children will retain the IWTC and some who won’t even though both have income support payments from the state. This adds yet another layer of discrimination that offends child rights.
Worse still, a penny-pinching mentality is displayed when the budget says the change to the In Work Tax Credit will cost “an additional $128 million over four years”. It looks like they are trying to take credit for their ‘generosity’. This is a false way to cost this policy as the ‘deserving’ unemployed should always have been allowed to keep their child payments regardless of losing hours of work.
Astonishing for a government that cares about children it continues to penalise poor children in order to provide a neoliberal work incentive in a pandemic recession. When the ‘deserving’ families lose their wage subsidy and have to go onto a benefit, the payment to the caregiver FOR THE CHILDREN falls by the IWTC amount of $72.50 a week. This penalty applies even if they end up with part-time hours of work. Thus Working for Families is hardly a secure cushion to protect children. Shame on Labour.
Budget 2020 should have corrected this policy and enabled all families on low incomes whether on benefits or not to have the full Working for Families package.